Following is the substance of conversation today with Butterworth, Chief of Office of Far Eastern Affairs, U.S.A. State Department.
1. Butterworth said 3 alternatives were open at present for Japanese Settlement, (A) Council of Foreign Ministers or some variant as suggested by Russia (B) Meeting of 10 nations without Russia (C) No peace treaty for the time being, with present arrangements continuing with some adaptations to achieve some of the purposes set by peace treaty, such adaptation could include- (i) Reduction in size and redistribution of occupation forces, (ii) Transfer of responsibility to Japanese Government, with SCAP exercising more supervision rather than giving directions, and (iii) An increase in proportion of civilians used in SCAR This would not involve any change in terms of reference of FEC.
Butterworth said that it was extremely unlikely that General Marshall would make decision on any of the foregoing or on calling of Peace Conference without further consultation with General MacArthur. (It would therefore seem desirable to see that MacArthur is kept informed of our position.) 2. I gained the impression that United States of America would not at present accept second alternative, namely conference without Russia. Butterworth pointed out strange position of Russia for bringing pressure on Post-Treaty Japan through economic power (along the lines of paragraph 4 of my 1631 of 12th. December).
Moreover if other 10 powers drafted a Treaty, Russia could then step in and offer easier terms, and thus improve her position in the eyes of the Japanese. He said he did not consider it impossible to obtain Chinese agreement to a ten-power Conference, but thought it would be very difficult to secure at present. China had obtained definite concessions under Sino-[Soviet] Treaty , in particular recognition of Chiang-Kai Shek as legitimate Government of China and recognition of Manchuria as an integral part of China. He thought China would regard recognition by the Soviet group of the Rebel Government in Greece, as a warning of what would happen in China if China went ahead without Russia. He said China had not attempted to use its stand on the veto as a bargaining point in obtaining more military and economic aid from U.S.A., nor had U.S.A. bargained on this point. I also gained...
Not likely to make any decision on Peace Conference in the immediate future. I reiterated to Butterworth that Australia considered it essential that Australia should participate in all Peace talks and should have equal role and full status with any other power.